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Last year, the total production was around 12 lakh tonnes, according to industry sources.

Andhra Rabi chilli area is reported 0.29 lakh hectare as on 23rd November compared to 0.24 lakh ha a year ago.

“Currently, the old stock position around Guntur region is 8 lakh bags. Farmers are planning to see off stocks, as prices will fall further once arrivals increase,” said an industry source.

Farmers resorted to growing the spice this year in the hope of getting better returns, as last year the price of the commodity doubled.

Arrivals of chilli started in Madhya Pradesh in the month of December, and has now begun in Guntur, in Andhra Pradesh, the largest producer of the spice in the country.

Currently, the arrivals in Guntur are around 25,000 to 30,000 bags (1 bag = 40 kgs) a day, but according to industry sources, it is expected to pick up in the coming days and may go up to 50,000 bags by February, industry sources said.

“In Madhya Pradesh this year production is estimated to be around 45 lakh bags (1 bag = 30 kgs) from last year's production of 40 lakh bags,” said Ashok Dattani, a Navi Mumbai based chilli trader said.

Chilli prices are expected to slide further owing to good production coupled with weak demand from overseas markets. Last year, export demand for chilli was strong owing to good demadn from Pakistan and China.

India exported 110,500 tonnes of chilli during April to October last year compared to 149,500 during the same period in 2010, according to Spices Board of India.

Chilli prices on the spot market has moved down by 21 per cent since November from Rs 8688.40 per quintal on 1 November to Rs 6878.25 on 9 January.